No sense of direction - and not a bus in sight

Oxiana chief executive Owen Hegarty is in the commodity business, and he is going to make a bundle for himself and his shareholders mining gold and copper at Sepon in the southern end of Laos.

His acquisition of 80 per cent of the Sepon resource from Rio Tinto and subsequent development of it is the stuff of legend: Oxiana bought into Sepon four years ago, and its shares were still trading below 6¢ in mid-2001. They hit $1.09 at the start of this year, valuing the company at about $1 billion.

This town loves a winner, and about 450 people turned up at a Melbourne Mining Club lunch in the Town Hall yesterday to hear Hegarty attribute Oxiana's success to, among other things, the selection of low-cost, high-quality assets, like Sepon.

They are not easy to find, Hegarty says, and merchant bankers are always serving up "mutton dressed as lamb". The key is to wait for the right deal, "and to us, deals are like buses - if you miss one, there'll be another one along shortly".

Over at Telstra, chief executive Ziggy Switkowski trades another commodity - data. And it's difficult to see where his next bus is coming from.

Telstra's land-line network is a fading asset, and the group's growth hopes depend substantially on its newer, wireless, mobile network.

But mobiles struggled to boost revenue by 6.4 per cent to $1.92 billion in the December half, below industry revenue growth of about 10 per cent, and below 18 per cent mobile revenue growth in the December quarter at Optus, Telstra's main rival.

Telstra's two big offshore assets also underperformed, again.

Reach, the 50-50 data transmission joint venture with Richard Li's PCCW group, lost $113 million in the half. It may not have a future at all: data transmission prices have fallen by 80 per cent since the collapse of the boom.

CSL, the Hong Kong mobile telephony business Telstra also bought from Li, posted steady profit on slightly lower revenue in Hong Kong dollar terms. The best spin you can put on that is that Telstra owns a solid business in a mature market, with accordingly mature growth prospects.

Telstra's response to all this is to continue to underwrite modest profit growth and higher shareholder payouts by controlling costs. And despite growing pressure on the group to buy growth, it seems there are not yet any Sepons on Telstra's horizon.

Switkowski said yesterday that Telstra's size limited the menu in Australia, and there were also "not many opportunities" in Asia, where Telstra wants only top-drawer broadband and mobile assets.